2. Application

2.2 Those portions of sections of this directive that provide for the Comptroller General to monitor compliance with this policy
within departments and/or request departments take corrective action, do not apply with respect to the Office of the Auditor General,
the Office of the privacy Commissioner, the Office of the Information Commissioner, the Office of the Chief Electoral Officer, the
Office of the Commissioner of Lobbying, the Office of the Commissioner of Official Languages and the Office of the Public Sector
Integrity Commissioner. The deputy heads of these organizations are solely responsible for monitoring and ensuring compliance with
this policy within their organizations, as well as for responding to cases of non-compliance in accordance with any Treasury Board
instruments that address the management of compliance.

3. Context

3.1 This directive supports the Policy on Internal Control
by outlining the responsibilities of the chief financial officer and custodians of
petty cash funds in the administration of
accountable advances. The directive establishes
a consistent approach that ensures effective financial controls for accountable advances within departments.

3.2 Accountable advances are provided on a
standing basis when it is necessary to make
payments or disbursements on an ongoing basis (for example, in the case of
petty cash or for a change fund in a cashier
function). Temporary accountable advances, such as travel or relocation advances, are provided when necessary, according
to the relevant policy instrument.

3.3 Good cash management practices require that accountable advances be kept to a minimum to avoid unnecessary
cash outflows while taking advantage of alternative methods of payment.

3.4 Accountable advances are issued under the authority of the following:

6. Requirements

6.1 General

6.1.1 Accountable advances are established only when required, used solely for the purpose for which they were issued, properly safeguarded, accounted
for and accurately reported on a timely basis. Prior to issuing an accountable advance, other alternatives, such as travel
cards, are examined. Such management practices and controls are to be documented and communicated
to those responsible for the functions mentioned in this directive.

6.1.2 The amount of any accountable advance, including petty cash or change fund, is calculated based
on operational needs with allowance made for peak periods and reimbursement time and without exceeding amounts required
to meet estimated expenses. Options such as the establishment of several small funds to separate custodians or reduction
of reimbursement cycles, in the case of petty cash funds, are to be considered.

6.1.3 Transactions that exceed the individual expense amount are not split into two or more transactions
to avoid the limits prescribed by the Accountable Advances Regulations for petty cash transactions.

6.1.4 Petty cash funds are used to make low-value payments only when it is more cost-effective than other
payment methods, with the use of an acquisition card being the preferred alternative unless none is available or its usage
is not suitable.

6.1.5 Petty cash advances are not used to make change. Petty cash or change funds are not used to give salary advances, to cash
cheques, or to make loans.

6.1.6 Accountable advances are charged to an appropriation and for standing advances, confirmation of authority
is received from Public Works and Government Services Canada (PWGSC). Note: The Department of Foreign Affairs and International
Trade and the Department of National Defence have separate authorities.

6.2 Safeguarding

6.2.1 The custody of a petty cash or change fund is limited to an employee of the Government of Canada. Change
of custodian is to be documented through an accounting and acknowledgement of responsibilities for the fund. One of the
following methods is to be used to change the custodian of a fund:

Closing out the fund so that the current custodian accounts for vouchers on hand and refunds the balance.
A cheque is then issued to the new custodian; or

Transferring the fund by means of a written statement showing cash on hand and receipts. The statement
is to be signed by the current and the new custodian and witnessed by a supervisor.

6.3 Reconciliation

6.3.1 The custodian reconciles according to 6.7 and reports are provided to the supervisor and appropriate
corrective measures are taken.

6.3.2 Cash shortages are reported, investigated and accounted for following the reconciliation of a petty
cash or change fund. Note that the Directive on Losses of Money
or Property applies. When it is determined that a cash shortage is the responsibility of the fund custodian because
of malfeasance or negligence or because the fund has not been duly accounted for, the shortage is to be recovered from the
fund custodian. Note that subsection 76(4) or section 78 of the
Financial Administration Act applies.

6.3.3 A disbursement is charged to the departmental appropriation whenit is determined that the cash shortage
is not the responsibility of the fund custodian. Note that the
Directive on Losses of Money or Property applies.

6.3.4 Cash overages are deposited and recorded in a Miscellaneous Other Revenue account if the source of
the overage cannot be identified. If the source of the overage can be identified, it is to be refunded to its rightful owner.
Note that the Directive on Receipt, Deposit
and Recording of Money applies.

6.3.5 Accountable advance records are reconciled to control accounts monthly.

6.4 Separation of duties

6.4.1 An adequate separation of duties of employees who deal with petty cash and change funds and other advances
is maintained.

6.4.3 When a complete separation of duties cannot be implemented because of organizational structure, availability
of staff, or materiality, duties are to be judiciously combined to ensure maximum separation of the functions.

6.4.4 The beneficiary of any accountable advance or a petty cash fund custodian is not to exercise financial
signing authority pursuant to section 33 or 34 of the Financial Administration Act under any circumstances in this area.

6.4.5 Persons do not remain custodians over an extended period of time unless alternate controls, such as
independent periodic verification, are implemented.

6.5 Recording

6.5.1 Financial systems allow the identification of all accountable advances to support reporting and follow-up
on the collection of outstanding advances.

6.5.2 Accountable advances, including standing advances, are to be accounted for in a timely manner as provided
for in the Accountable Advances Regulations.

6.6 Replenishment, settlement and refund

6.6.1 Standing advances are replenished to their original value unless their use justifies a decrease, increase, or complete recovery. Other accountable
advances (or portions) are to be settled and fully refunded in a single payment. Accompanying vouchers are to be voided
in a manner that will prevent their reuse. Note: Accountable Advances Regulations apply.

6.7 Custodians are:

Personally responsible and accountable for advances that have been issued to them. Any loss or shortage
may be recovered from them. Note that subsection 76(4) or section 78 of the
Financial Administration Act applies.

Responsible for reconciling the petty cash fund even when a petty cash fund is not used frequently. It
should be reconciled once a week or at least once a month to verify that it balances and that no theft has taken place,
and reports on the reconciliations provided to their supervisors.

6.8 Monitoring and reporting requirements

6.8.1 Chief financial officers are responsible for supporting their deputy head by overseeing the implementation
and monitoring of this directive in their departments, bringing to the deputy head's attention any significant difficulties,
gaps in performance or compliance issues and developing proposals to address them, and reporting significant performance
or compliance issues to the Office of the Comptroller General.

6.8.2 The Comptroller General is responsible for monitoring departments' compliance with the requirements
of this directive and conducting a review within five to eight years.

7. Consequences

7.1 In instances of non-compliance, deputy heads are responsible for taking corrective measures within their
organization with those responsible for implementing the requirements of this directive.

7.2 In support of the responsibility of deputy heads to implement the
Policy on Internal Control and related instruments,
chief financial officers are to ensure corrective actions are taken to address instances of non-compliance with the requirements
of this directive. Corrective actions can include requiring additional training, changes to procedures and systems, the
suspension or removal of delegated authority, disciplinary action, and other measures as appropriate.

7.3 Individuals are reminded that sections 76 to 81 (Civil Liabilities and Offences) of the
Financial Administration Act as well as sections 121
(Frauds against the Government), 122 (Breach of Trust), 322 (Theft) and 380 (Fraud) of the
Criminal Code may apply.

8. Roles and responsibilities of government organizations

This section identifies other significant departments with respect to this directive. In and of itself it does not confer
an authority.

8.1 Public Works and Government Services Canada (PWGSC)

PWGSC is responsible for the following:

Approving departmental requests for increases or decreases to funding for standing advances from the Central Working
Capital Advance Fund;

Seeking approval and maintaining the appropriation (PWGSC Working Capital Loan Vote L15b) from which standing
advances are issued;

Preparing the Public Accounts of Canada.

8.2 The Treasury Board Secretariat, Office of the Comptroller General is responsible for development, oversight and maintenance of this
directive and for providing interpretative advice.

Appendix - Definitions

Management practices and controls (pratiques et contrôles de gestion)

Are policies, processes, procedures and systems that enable a department to operate its programs and activities, use its resources effectively, exercise sound stewardship, fulfill its obligations and achieve its objectives.

Periodic (périodique)

Is an interval of time determined to be reasonable by the chief financial officer based on risk and on the particular departmental circumstances (e.g., volume of transactions, automation of systems, size and structure of organization)

Definitions for accountable advances, standing advances, petty cash funds and other
terms used in this directive are found in the Accountable Advances Regulations.